Boom and bust in continuous time evolving economic model

Details Boom and bust in continuous time evolving economic model Boom and bust in continuous time evolving economic model

2008-01-25

arxiv.org/abs/0801.3973v2

EPJB 70:567-573 (2009)

Economy

Quantitative Finance

General Finance

7 pages, 9 figures, epjb style. New references. Section on avoiding boom and bust. Fix bibliography

Scientific paper

10.1140/epjb/e2009-00243-y

We show that a simple model of a spatially resolved evolving economic system, which has a steady state under simultaneous updating, shows stable oscillations in price when updated asynchronously. The oscillations arise from a gradual decline of the mean price due to competition among sellers competing for the same resource. This lowers profitability and hence population but is followed by a sharp rise as speculative sellers invade the large un-inhabited areas. This cycle then begins again.

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